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3.3 The strategic planning process

The rational approach to strategic planning breaks down the process into three distinct steps.

1 Strategic analysis – three key areas

§ External analysis of markets, competitors, the business environment, etc. to identify opportunities and threats.

§ Internal analysis of the firm’s resources, competences, etc. to identify strengths and weaknesses.

§ Stakeholder analysis – to understand stakeholder expectations/influence in order to clarify objectives.

2 Strategic choice – again three key angles to consider

§ What is the basis of our strategy? In particular how are we going to compete – high quality, low costs?

§ Where do we want to compete? Which markets, countries, products?

§ How do we want to get there? Organic growth, acquisition or some joint arrangement such as franchising?

3 Strategic implementation

§ Once determined, the long-term strategy needs to be translated into plans for marketing, human resources management, IT, production, organizational structure, etc.

§ The strategy may involve major changes so these will also have to be managed.

Test your understanding 10

Give three strategic issues that should be considered by the headmaster of a school as part of strategic analysis.

Chapter summary

Test your understanding answer

Test your understanding 1

C

A sole trader would normally be someone working on their own, so there would be no collective goals.

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